When filing bankruptcy, or any time you're buying on credit, beware of the Purchase Money Security Interest (PMSI). A PMSI gives the seller of the goods a security interest in whatever you purchase. This is especially sneaky when you use an in-store credit card, such as one issued by Best Buy, Sears or, in the Salt Lake City area, R.C. Willey. When you applied for credit with these companies the credit application you signed says that you grant a PMSI in whatever you buy using the card. This extends to EVERYTHING you buy, even if you bought it five years ago and think you long ago paid that purchase off. If you still owe money on the card, those items are probably collateral for the debt.
Suppose that last Christmas you used your Best Buy card and purchased a laptop and an iPod. You kept the laptop but you gave the iPod as a gift. Now you find you have to file bankruptcy and you list Best Buy as a creditor. Everything seems fine until a representative of Best Buy calls and asks if you intend to reaffirm their debt. It's a credit card, you say. I'm not reaffirming with VISA or Master Card, why would I reaffirm with them?
The simple answer is the PMSI. As a secured creditor Best Buy is entitled either to be paid the value of what you want to keep or have the merchandise returned. You probably don't want to go to whomever you gave the iPod to and ask for it back so you have no choice but to pay for it. Reaffirmation is a negotiated agreement between debtor and creditor and a creditor doesn't have to reaffirm, so if Best Buy demands that you reaffirm the entire debt if you want to keep the iPod you might have to pay the entire debt, even though you'd be happy to give back the laptop.
The reason you don't have to reaffirm with VISA or Master Card is that they are unsecured creditors. They did not get a PMSI in whatever you bought using the card so they have no right to demand anything back.
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